“In the end, you actually see what’s going on,” said McGhee, who came to the cold realization that none of his four payments reduced the principal amount he owed. “I was just quick to get the dough at the time.”

With rollbacks of consumer protections being talked about in Washington, the working poor could become a softer target.

Title-pawn shops are highly concentrated in the poorer neighborhoods near Robins Air Force Base and near Fort Benning.

“It’s an abundance of them over here,” said Alice Womack, a thrift-store clerk in Warner Robins, who added that, thanks to “being raised right by my mama,” she knew not to borrow against her car.

Still, Womack was surprised to find, upon the death of her husband in 2012, that he’d borrowed against his car without telling her. On top of being a grieving widow, she was faced with having to buy back the car from a title-pawn company.

In 2004, Georgia, banned so-called payday loans, where lenders offer high-cost, short-term loans in exchange for getting dibs on a borrower’s next paycheck.

Yet it is one of 22 states to allow title-pawn operations with triple-digit annual interest rates. Three of the top national title-pawn companies are headquartered in Georgia — TMX Finance, Select Management Resources and Community Loans of America.

An analysis of federal court records by McClatchy and The Telegraph finds that over the past decade Georgia leads all states in which these big three title-pawn companies arelisted as creditorsin bankruptcy filings.Georgia is number one, both in raw numbers and per 100,000 residents.

What makes the title-pawn industry in Georgia unique is its lack of meaningful oversight, both on the state and federal level. And while borrowers think they are getting “loans,” the word is nowhere to be found in a contract that includes terms like finance charges and annual percentage rates.

This screenshot of language from an actual contract between TitleMax and a customer in Middle Georgia makes no mention of the word loan. In the fine print it warns a borrower that failure to pay can result in the title pawn company seizing their car.

Kevin G. Hall

The Georgia Department of Banking and Finance has a web page devoted to title-pawn companies, stressing in capital letters that it “does NOT” have jurisdiction over them.

This screenshot of the Georgia Department of Banking and Finance’s web page on pawnshops and title-pawn lenders warns consumers the agency DOES NOT have jurisdiction over either.

Georgia Department of Banking and Finance website

“In most cases, the municipal authority responsible for licensing and monitoring pawnshops will be the local police department or sheriff’s office,” the web page advises.

That means if a customer has a problem, they must call local police, who often are quick to note it is a civil matter.

In the summer of 2017, Willie Pearl Gary called police in Columbus when she had a dispute with a title-pawn employee over a payment.

“They really acted like they didn’t really care what I was saying,” Gary said of the officers.

Gary, in her early sixties, lives across the Chattahoochee River from Columbus in Phenix City, Alabama. She went to TitleMax in Columbus in December 2015 and secured more than $4,000 against a 2010 Toyota Camry. She stopped paying it off in 2017, arguing she was being fleeced, and continues fighting efforts to take her car.

Receipts provided by Gary show how these financial instruments can become debt traps. A payment she made to TitleMax on Feb. 5, 2016, is illustrative. For the $440 she paid that month, only $3.64 actually went to knocking down her outstanding principal of about $4,300.

An inventory specialist for W.C. Bradley Co., which manufactures Char-Broil grills,Gary made three more payments that spring, but her monthly interest payment was still nearly $400 and her principal had only dipped to $3,921.57.

“The loan would never go out — it just kept getting more and more,” she said of the fees and interest that grew every month despite her payments. “And I stopped paying in 2017.”

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Calls and emails by McClatchy and The Telegraph to TitleMax, Select Management Resources and Community Loans of America went unanswered. Representatives of trade associations for the broad non-bank lending sector declined to comment, as did the chief lobbyist for the sector.

The closest explanation of how the industry sees itself and its role in communities comes from the website of TMX Finance, which operates TitleMax, TitleBucks and other brands.

“Many of our customers have nowhere else to turn when they suffer short-term financial setbacks like medical emergencies or home repairs, so it is our mission to remain a reliable source of credit and offer customers hope and opportunity,” the company said in the “What We Do” section.

And in Macon-Bibb County, where Census Bureau data shows extreme poverty is on the uptick, there is no shortage of people who banks don’t consider creditworthy but who need quick cash.

Immediate relief to pay rent or an electric bill, warn consumer advocates, often comes with such steep interest rates that the climb out from debt is progressively harder.

What little is known about the size of this largely unregulated lending sector comes from an April 2009 bankruptcy affidavit filed by TitleMax Holdings, which was seeking to restructure itself under Chapter 11. The company said it was generating revenues in excess of $220 million, because borrowers on average extended their payback period at least eight times, resulting in huge interest earnings for TitleMax.

Caitlin Ostroff / McClatchy

It’s why consumer advocates such as the North Carolina-based Center for Responsible Lending label TitleMax and its competitors “usurious,” meaning they charge an exorbitant rate for the use of money.

“State-level usury laws are the strongest protections against the harm of these predatory loans. Thankfully Georgia has those protections in place for payday loans, but not for these car-title loans,” said Diane Standaert, the group’s executive vice president and director, of state policy.

Usury is a concept as old as the Bible. Although it is frowned upon in multiple books of the Old Testament, there is no universally recognized definition of interest that constitutes usury.

Ghost companiesGeorgia keeps virtually no data on the title-pawn industry. Regulators and consumer advocates acknowledge they cannot say how many individual companies operate here. A report earlier this year by the advocacy group

and Georgia State University’s Student Innovation Fellowship found that as of January there were at least 755 title-pawn locations statewide.

State officials confirmed they don’t track auto repossessions. And the Georgia Department of Revenue’s motor vehicle division does not keep statistics on the transfer of titles from individuals to title-pawn companies. It also can’t say how much money these companies lend against titles.

“This is an industry that’s really preying on a community, really preying on young people who may not have had a bank account before or a financial product,” said Beth Stephens, senior director for public policy at Georgia Watch in Atlanta.

Borrowers like McGhee and Gary are drawn by the promise of quick cash and few questions asked.

“It seems like you are never through paying the loan,” grumbled McGhee, who works a few blocks from Robins Air Force Base and was surprised when told it wasn’t really a loan he took out.

“It’s really an option contract to buy back their car,” explained Clifford Carlson, a Macon-area bankruptcy attorney who has battled title-pawn firms in court.

Brian McGhee, a barber in Warner Robins, Georgia, borrowed money from a title-pawn company and said he got caught in debt trap.He paid monthly thinking he was paying down the loan but it mostly went to fees and interest.

Kevin G. Hall Kevin G. Hall

More than two years after taking out a title “loan,” McGhee settled it by giving the 1999 Crown Victoria to a friend in exchange for the friend paying off what he owed. He was out of debt, but also out of a car.

Warnings, little action

The lending practices of chartered banks are subject to federal oversight and in some cases regulation by the Georgia Department of Banking and Finance.

Similarly, non-bank companies that offer small installment loans, sometimes called industrial loans, are regulated by Georgia’s Office of Insurance and Safety Fire Commissioner, which said there are 71 of these companies operating in 900-plus locations statewide.

Installment loans, capped at $3,000, can span no longer than three years, lenders are audited annually and a $500 six-month loan can carry an annual percentage rate as high as 61 percent.

Title-pawn companies, however, face few restrictions in Georgia and nobody looks over their shoulder. Contracts stipulate that disputes cannot be resolved in court, closing down another avenue to trapped borrowers.

For most types of loans, “typically as part of the licensure requirement there is some data that is provided to the state agency. There is at least something,” said John Rao, an attorney with the National Consumer Law Center, an advocacy group. But, he added, for title-pawn loans “none of that is happening.”

And so, Georgia’s Office of Insurance feels the need to warn borrowers about products it does not regulate. Consumers are “much better off going to small industrial loan lenders if they have needs for money than if they are going through a deregulated industry such as the title-pawns,” Chris Stephens, the office’s director of the Industrial Loan Division, warned in an interview.

The Georgia Department of Law’s Consumer Protection Unit, which handles consumer complaints, offers a warning on its web page.

This screenshot from the website of the Georgia Department of Law’s Consumer Protection Unit refers to title-pawn companies as part of the ‘fringe banking’ industry. It notes the ‘working poor’ are the industry’s main targets.

Georgia Department of Law website

“Look for the lowest interest rate from a bank or credit union. Consider a loan from family or friends,” advises one of its web pages, referring to title-pawn companies and installment loan providers as “fringe banking.”

Near downtown Macon, beside Mercer University, Centenary United Methodist Church gets a dozen people or so every week who come in seeking financial guidance.

“They typically have a title-pawn and are paying on it,” said Pastor Eric Mayle, adding that most don’t have a bank account and are left with an option “intended to keep poor people poor.”

A necessary but unaffordable car repair or outstanding utility bills are chief reasons they turned to title-pawn stores for cash, he said.

Title-pawn companiesoften locate where people need quick cash.

Complete Cash Discount Title Pawn on Watson Boulevard in Warner Robins is located right next to Pro Automotive, a car repair shop.

“They send a bunch of people over to us,” a Pro Automotive mechanic confirms of his neighbor, whose window boasts “Money in Minutes!”

Complete Cash made headlines in August when Georgia Attorney General Chris Carr announced a settlement and fines because the company, rather than seize a customer’s car, improperly tried to sue.

Going for broke

Because there is so little public data about the title-pawn sector, one important proxy is federal bankruptcy filings.

McClatchy and The Telegraph reviewed federal bankruptcy records from 2008 to June 2018, and found that the big three title companies show up more in bankruptcy filings in Georgia than any other state, both in total numbers and on a per-resident basis.

The bankruptcy filings weren’t necessarily caused by a title-pawn company, but they underscore how most borrowers turn to them in desperation.

The presence of a TitleMax in a filing is mostly symbolic because technically they are not a creditor to the borrower. There was no actual “loan” from the title-pawn company, which also already has the car title in hand.

“There’s no credit report involved and past history doesn’t mean anything,” said A.G. Knowles, a bankruptcy attorney in Macon, describing as “legal” but “horrendous.” the title-pawn terms. “People get in these traps and cannot get out,” he said.

Watson Boulevard west of Robins Air Force Base is home to several title pawn businesses.

Beau Cabell bcabell@macon.com

The federal Consumer Financial Protection Bureau has been working on a new rule since 2016 that would force title-pawn companies to adopt an “ability to pay” measurement that could prevent many Georgians from falling into a debt trap. The payday loan industry, also affected by the change, brought suit earlier to block the measure. The Trump administration has said it might grant waivers to get around the rule if lenders lose their court fight.

For the past two years, debt traps have not been an issue for service members at Fort Benning, Robins Air Force Base and other military installations across Georgia and the nation. Thanks to protections afforded under the Military Lending Act, which has been fully in force only since 2016, lenders can’t charge active duty personnel an annual percentage rate higher than 36 percent, nor can they offer them any title-pawn products.

However, as part of its deregulation push, the Trump administration has signaled it won’t do spot auditing of compliance with the military lending rule. It did indicate it won’t seek to roll back the rule.

Reporters called numerous title-pawn companies in Middle Georgia seeking an interview and were ignored. The team from McClatchy and The Telegraph then went, for a week in July, to title-pawn locations across Middle Georgia asking, as a customer would, about terms and conditions.

Most of these operations declined to share the kind of term sheet or promotional material commonly offered by banks. When asked if the title-pawn company offered military discounts, all but one of dozens of establishments told reporters that they were prohibited from lending to service members.

Clerks shrugged when asked why there is differential treatment, although one manager offered that regulators “are trying to protect the military from lenders like us.”

For Georgians not on active military duty, title-pawn companies can charge, for the first three months, up to 25 percent interest monthly. After three months, the rate falls to 12.5 percent monthly. The complex math adds up to a total maximum yearly interest rate of 187.5 percent. For a loan of $2,000 a title pawn company could charge $3,750 in interest and fees, and a borrower would have to pay $5,750 to get his or her car title back.

“If they are acknowledged to be dangerous at anything above 36 percent APR [for military personnel], why doesn’t the same logic apply to other Georgians, particularly lower income people?” said Stephens, of Georgia Watch.

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The unbanked

In Warner Robins, three national banks — Bank of America, Wells Fargo and BB&T — can be found along bustling Watson Boulevard, the main thoroughfare that leads to Robins Air Force Base. But these banks are located near Interstate 75, by shopping malls with national retailers.

Get a few miles off the interstate, and for miles leading up to the military base, there are few banks, just a smattering of ATMs and lots of title-pawn lenders and installment-loan companies. There are many causes, including the growth in online banking, but it is also a reflection of the large segment of society that remains outside the conventional banking system. They are known as the unbanked.

“The banks want people with lots of money, and if you don’t have a lot of money they don’t give a hoot about you,” said Wayne Gilleland, a bankruptcy attorney in Macon.

The Federal Deposit Insurance Corporation tries to gauge the size of the U.S. population without a bank account. Its most recent biennial survey covered 2015 and found that nine million households were outside the banking system. Another 24.5 million — or just under 20 percent of all U.S. households — had a checking or savings account but obtained financial products and services outside the banking system.

It’s a safe bet many are in Macon-Bibb County. Overall, nearly 28 percent of the county’s residents live in poverty, twice the national average, according to the U.S. Census Bureau’s American Fact Finder website. In Houston County, home of Robins Air Force Base, 15 percent live in poverty.